Waller: Zero job growth does not seem like a stable employment environment

FED'S WALLER: THERE ARE REASONS INCLUDING AI TO THINK THE HIRING MAY REMAIN WEAK Fed's Waller: Firms are starting to shed labor after over-hiring Fed's Waller: Companies are still trying to determine how AI may reduce labor demand, or similarly allow workers to be repurposed Fed's Waller: Right Now All Of The Data For The Past Year Suggests Labor Demand Is Falling More Than Labor Supply - Would Be Inefficient To Move To A Scarce Reserves Regime - If Productivity Is Rising The Neutral Rate Is Likely Rising As Well

Thank you, Constance, and thank you for the opportunity to speak to you today. Let me commend NABE for focusing this year's conference on economic disruptions including artificial intelligence, a subject I have spoken on often lately, and which I will address again tomorrow at a Boston Fed conference. But today, I will turn to another topic that I know is of interest, the outlook for the U.S. economy and the implications for the Federal Open Market Committee's (FOMC) goals of maximum employment and stable prices. At our January meeting, the FOMC voted to hold our policy rate steady, following three 25-basis-point cuts since September. The Committee had cut rates because job gains had slowed and downside risks to employment had increased, amid somewhat elevated inflation. In my view, appropriate policy should look through tariff effects on inflation. Underlying inflation was running close to 2 percent while the labor market remained at risk, and these circumstances led me to favor another cut in January, and to dissent against the Committee's decision. I felt that the risk of a substantial downturn in the labor market combined with a limited risk of higher inflation warranted another cut, bringing the policy rate closer to a neutral setting. Even in the absence of some data due to last year's government shutdown, a factor cited by some FOMC colleagues voting to pause, the balance of risks for me were weighted toward further policy easing. FED'S WALLER: JANUARY JOBS DATA AN UPSIDE SURPRISE, IF CONTINUES IN FEBRUARY MAY BE APPROPRIATE TO KEEP RATES STEADY FED'S WALLER: NO DISMISSING WEAK JOB CREATION OF 2025, BUT ALSO TRUE THAT ECONOMIC ACTIVITY HAS BEEN STRONGER THAN EXPECTED ...

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